Renamed Philips Semi lands U.S. passport deal

Philips Semiconductor is now NXP, and one of its first notable deals is a contract to supply chips for e-passports to the U.S. government.

NXP, which stands for "next experience," will primarily continue to concentrate on the four markets on which it eventually focused when part of Philips: automotive, mobile, home and microcontroller. In the first half, revenue grew 12 percent, faster than the 9 percent growth for the semiconductor industry as a whole, said CEO Frans van Houten.

Last year, Philips announced it would split off the semiconductor unit. The chip group explored the idea of merging with other companies but didn't find a deal it liked. Instead, a group of private equity firms, including Bain Capital and Apax Partners, have agreed to buy 80.1 percent of the company. The firms have a history of keeping their companies private; as a result, an IPO for NXP is not on the horizon for at least the next few years, said van Houten. The private investors paid $4.4 billion for the 80.1 percent of the company.

The break from Philips is amiable. The Dutch giant still owns close to 20 percent of the company and remains a significant customer. Several thousand Philips employees (including 500 from fairly prolific Philips Research) will stay at NXP. Philips also transferred around 25,000 patents to the new company.

"Philips wants to concentrate on lifestyle and health care. They want to get out of volatile markets," van Houten said. "But we're a semiconductor company. We thrive on that."

NXP, he added, will be one of the two companies selling chips to the U.S. State Department. The U.S. plans to issue 15 million e-passports in the first year of the program, beginning in the next few months. These passports contain personal information as well as an RFID chip that transfers the data to a reader. The system is expected to cut down passport theft and fraud, but privacy advocates claim they could let third parties obtain personal information.

Spinoffs have been the rage in the semiconductor world, but NXP is the first not to pick a name that sounds like a restaurant at a beach resort. Advanced Micro Devices transformed its flash unit into Spansion, while Infineon's flash unit became Qimonda.